Correlation Between Jointo Energy and Huatian Hotel

Can any of the company-specific risk be diversified away by investing in both Jointo Energy and Huatian Hotel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jointo Energy and Huatian Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jointo Energy Investment and Huatian Hotel Group, you can compare the effects of market volatilities on Jointo Energy and Huatian Hotel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jointo Energy with a short position of Huatian Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jointo Energy and Huatian Hotel.

Diversification Opportunities for Jointo Energy and Huatian Hotel

0.49

Correlation Coefficient

Jointo Energy  Huatian Hotel

Very weak diversification

The 3 months correlation between Jointo and Huatian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Jointo Energy Investment and Huatian Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huatian Hotel Group and Jointo Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jointo Energy Investment are associated (or correlated) with Huatian Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huatian Hotel Group has no effect on the direction of Jointo Energy i.e., Jointo Energy and Huatian Hotel go up and down completely randomly.

Pair Corralation between Jointo Energy and Huatian Hotel

Assuming the 90 days trading horizon Jointo Energy Investment is expected to generate 1.16 times more return on investment than Huatian Hotel. However, Jointo Energy is 1.16 times more volatile than Huatian Hotel Group. It trades about 0.26 of its potential returns per unit of risk. Huatian Hotel Group is currently generating about -0.05 per unit of risk. If you would invest  509.00  in Jointo Energy Investment on September 29, 2024 and sell it today you would earn a total of  104.00  from holding Jointo Energy Investment or generate 20.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Jointo Energy Investment  vs.  Huatian Hotel Group

Jointo Energy Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jointo Energy Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jointo Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Huatian Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huatian Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jointo Energy and Huatian Hotel

The main advantage of trading using opposite Jointo Energy and Huatian Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jointo Energy position performs unexpectedly, Huatian Hotel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Huatian Hotel will offset losses from the drop in Huatian Hotel's long position.

The idea behind Jointo Energy Investment and Huatian Hotel Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .